Firms demand for a resource use the following data to

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Firm's Demand for a Resource Use the following data to answer the question below. Assume a perfectly competitive product market

Units of Labor Units of Output
0 0
1 7
2 13
3 18
4 22
5 25

a. Calculate the marginal revenue product for each additional unit of labor if output sells for $3 per unit
b. Draw the demand curve for labor based on the above data and the $3-per-unit product price
c. If the wage rate is $15 per hour, how much labor will be hired?
d. Using your answer to part ©, compare the firm's total revenue to the total amount paid for labor. Who get the difference?
e. What would happen to your answers to parts (b) and (c) if the price of output increased to $5 per unit, other things constant?

Reference no: EM13378212

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